Press Release by Sen. Ginny Burdick
Stabilizing Oregon’s Revenue system with a robust Rainy Day fund is my top priority for the 2011 Session.
Under current law, state economists predict projected state revenues for the next two years. This prediction is based upon economic indicators, projected employment rates, etc. The state budget is then created around this estimated number. The budget forecast is never accurate because it is virtually impossible to make an accurate estimate two years into the future.
When collected state revenue exceeds the forecasted amount by 2% or more, the difference is returned directly to the taxpayers as a personal income tax ‘kicker’. But there is no method of boosting revenues when the forecast is lower than expected. The result is the budget roller coaster that has become all too familiar in Oregon: during tough economic times, when revenue falls short of projections, we are forced to cut education and other vital programs. When the economy is strong and revenue collection is higher than expected, we are obligated to return the additional revenue in the form of a kicker, and are thus unable to save for the difficult times to come.
The solution is a simple one, drawn straight from personal finance 101: save money for a rainy day. Just as we save money in our personal finances to protect our families in future need, we should be protecting our schools and other essential public programs in case of future economic need. The current budget crisis facing Oregon will become a regular occurrence if we don’t stabilize our revenue system.
The proposed constitutional amendment I have introduced (SJR 10) will create a constitutional rainy day fund that can only be used during documented economic downturns, and only then with a 3/5 vote in both the House and Senate. In years where revenues exceed 2 percent of the forecast, the first six percent above the forecast would be diverted into the rainy day fund. Any amount over six percent would be returned to taxpayers. Had this been in effect in 2007, the rainy day fund would have received $800 million and taxpayers would have received a $400 million kicker. I will also be introducing legislation to provide regular deposits to the rainy day fund when the economy is doing well.
Even if we are successful in passing rainy day fund/kicker reform legislation this session, voter approval will be required because it is a constitutional amendment. I hope you will join me in supporting these critical reforms to update and modernize our tax system.